2. A consumer is faced with a utility function u(x, y) = 4x² + 3xy + y² And his budget constraint is given by In(xy) = 5. a) Find the optimal values of x and y b) Find the value of the shadow price 2 c) Interpret the value of lambda. Does it make economic sense? d) Other than completeness. monotonicity and transitivity, discuss the other three axioms of consumer preferences.
2. A consumer is faced with a utility function u(x, y) = 4x² + 3xy + y² And his budget constraint is given by In(xy) = 5. a) Find the optimal values of x and y b) Find the value of the shadow price 2 c) Interpret the value of lambda. Does it make economic sense? d) Other than completeness. monotonicity and transitivity, discuss the other three axioms of consumer preferences.
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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A9.
Transcribed Image Text:2. A consumer is faced with a utility function
u(x, y) = 4x² + 3xy + y²
And his budget constraint is given by In(xy) = 5.
a) Find the optimal values of x and y
b) Find the value of the shadow price 2
c) Interpret the value of lambda. Does it make economic sense?
d) Other than completeness. monotonicity and transitivity, discuss the other three axioms of
consumer preferences.
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